Business

Obama, automakers announce mileage, pollution plan

Washington - President Barack Obama wants drivers to go farther on a gallon of gas and cause less damage to the environment - and be willing to pick up the tab.

Obama on Tuesday planned to announce the first-ever national emissions limits for cars and trucks, as well as require a 35.5 miles per gallon standard. Consumers should expect to pay an extra $1,300 per vehicle by the time the plan is complete in 2016.

Carol Browner, the White House energy and climate director, publicly confirmed the new initiative in appearances on morning network news shows Tuesday, calling it a "truly historic" occasion and saying that such tougher environmental standards have been "long overdue."

The plan also would effectively end a feud between automakers and statehouses over emission standards - with the states coming out on top but the automakers getting the single national standard they've been seeking and more time to make the changes.

Obama's plan couples for the first time pollution reduction from vehicle tailpipes with increased efficiency on the road. It would save 1.8 billion barrels of oil through 2016 and would be the environmental equivalent to taking 177 million cars off the road, senior administration officials said Monday night.

New vehicles would be 30% cleaner and more fuel-efficient by the end of the program, according to officials familiar with the administration's discussions. The officials also spoke on condition of anonymity because the formal announcement had not been made.

The plan still must clear regulatory hurdles at the Environmental Protection Agency and the Transportation Department. Automakers appear to be in support.

Administration officials said consumers were going to pay an extra $700 for mileage standards that had already been approved. The comprehensive Obama plan would add another $600 to the price of a vehicle, a senior administration official said.

The extra miles would come at roughly a 5% increase each year. By the time the plan takes full effect, at the end of 2016, new vehicles would cost an extra $1,300.

That official said the cost would be recovered through savings at the pump for consumers who choose a standard 60-month car loan and if gas prices follow government projections.

"We worked very, very closely with all the car companies, with California, with the environmental groups," Browner said Tuesday. "This is truly historic. It is long overdue. ... Congress stood in the way of tougher fuel standards."

"Historically, the program was a fleet average," said Browner, who headed the EPA during the Clinton administration. "What we're doing here is proposing standards for every category of car."

Browner said the administration worked closely with the industry on this issue. "What they told us over and over again," she said, "was they wanted to make more fuel-efficient, they wanted to make cleaner cars and what they needed was the government to give them predictability and certainty so that they could make the investments toward cleaner cars."

In a battle over emission standards, California, 13 other states and the District of Columbia have urged the federal government to let them enact more stringent standards than the federal government's requirements. The states' regulations would cut greenhouse gas emissions by 30% in new cars and trucks by 2016 - the benchmark Obama planned to unveil for vehicles built in model years 2012 and beyond.

The Obama plan gives the states essentially what they sought and more, although the buildup is slower than the states sought. In exchange, though, cash-strapped states such as California would not have to develop their own standards and enforcement plan. Instead, they can rely on federal tax dollars to monitor the environment.

The auto industry will be required to ramp up production of more fuel-efficient vehicles on a much tighter timeline than originally envisioned. It will be costly; the Transportation Department last year estimated that requiring the industry to meet 31.6 mpg by 2015 would cost nearly $47 billion.

But industry officials - many of whom are running companies on emergency taxpayer dollars - said Obama's plan would help them because they would not face multiple emissions requirements and would have more certainty as they develop their vehicles for the next decade.